In first try, Trifecta Capital overshoots Rs 300 crore target
Firm to exercise greenshoe option and raise Rs 200 crore more.
The Gurgaon-based speciality finance firm, which launched the Trifecta Venture Debt Fund-I three years ago, is in the final stages of closing the fundraising process, with its limited partners (LPs) showing keener interest at a time when venture debt is being increasingly acknowledged as a viable option to equity financing.
In risk capital parlance, exercising a greenshoe option allows a venture capital or private equity firm to raise capital over and above its original target corpus, having received greater interest from investors, backing its investment thesis or track record.
Trifecta Capital is looking to raise the entire amount by the end of July, two months before its targeted timeline. "We are in the final lap of fundraising. We expect to do a final close with Rs 500 crore in the next 60 days," Rahul Khanna, managing partner at Trifecta Capital, told ET.
The venture debt firm has, till date, received investment commitments worth Rs 425 crore, of which it has already deployed Rs 300 crore across 21 portfolio companies.
Trifecta, which was founded by Khanna, a former Canaan Partners India managing director, and former Accenture senior executive Nilesh Kothari, has raised all its capital from large financial institutions, life and general insurance companies, development finance institutions, endowments and family offices based in India.
RBL Bank and the family offices of Eicher Motors, Havells India and Pat ni Computer Systems have been some of the investors in the firm, which made the first close of its maiden fund at Rs 200 crore in September 2015.
The development comes at a time when the country's top venture debt providers, which also includes Temasek-backed InnoVen Capital and IntelleGrow, have been ramping up the pace of their investments and increasing their portfolios exponentially . Trifecta Capital, typically, backs ventures that have already raised some amount of institutional capital, preferably from top-tier venture capital funds.
As the demand for venture debt increases, Trifecta Capital has upped its investment range to up to Rs 50 crore from Rs 5-30 crore, while maintaining the term of the debt between 30 and 36 months, with an interest rate coupon of 15%, plus or minus 50 basis points, depending on the size of the round.
Some of its other prominent bets include online grocery retailer BigBasket, on-demand services provider UrbanClap, express surface logistics firm Rivigo, pharmacy aggregator PharmEasy and B2B marketplace Industry Buying.
However, while most of its investments have ranged between Rs 7 crore and Rs 20 crore, BigBasket has been its biggest at Rs 45 crore made in March. As it seeks to deploy the remaining Rs 200 crore by the end of 2017, the firm is looking at financing larger ticket sizes akin to the BigBasket deal.
"There are situations where we are being invited to put together larger rounds of debt financing. There are at least a couple of conversations happening where companies are seeking more than Rs 50 crore," said Khanna, who, however, declined to name specific companies that they are conversing with, or the sectors these companies operate in.
Trifecta Capital is looking to participate in such larger rounds through a syndication model that will include some of their LPs and global investors dealing with structured debt. “For larger investments, we are likely to syndicate with offshore venture debt funds and mid-market structured finance funds,” he said.
However, big deals in the venture debt space for startups remain far and few, with only OYO Rooms raising Rs 55 crores last year, and more recently, ShopClues bagging Rs 50 crore, both from InnoVen Capital.
The Temasek-backed venture debt fund, which is the largest provider of the asset class in India, has been able to deploy Rs 550 crores in FY17 alone.